The company responsible for the Olympic security debacle is being paid £53 million
extra for its work, after London 2012 organisers increased its “management
fee” almost tenfold.

Confidential Home Office documents seen by The Daily Telegraph show that G4S has had its fee for managing civilian security staff for the Games rise from £7.3 million to £60 million.

The fee the company takes for running its Olympic office has risen more than 10 times faster than its spending on recruitment, the documents show.

The firm’s failure to provide enough staff for Olympic sites this week forced ministers to assign an extra 3,500 Armed Forces personnel to security work for the Games.

The new military deployment yesterday led to intense scrutiny of the contract and prompted calls for G4S to be banned from future government work.

The row over security added to the mounting sense of disarray around the Games, which start two weeks today. Olympic organisers privately admitted that the last two days have been the most challenging in the seven-year build-up.

The Home Office initially estimated that 10,000 security staff would be needed for London 2012, but last year that estimate was increased to 23,500.

G4S was initially contracted by Locog, the Games organiser, in 2010 to provide 2,000 of the required personnel and be paid £86 million. Last year, its requirement was increased to 10,400 guards, with a requirement to train 3,300 students and 2,500 unpaid volunteers.

Locog then negotiated a new contract with G4S, which is now worth £284 million in total.

Figures seen by The Daily Telegraph show that the firm’s “programme management costs” increased much more sharply than its outlay on staff.

The firm’s management fee has risen from £7.3 million to £60 million.

Almost £34 million of the increase is for the G4S “programme management office” overseeing the security operation. By contrast, the firm’s recruitment spending has increased by only £2.8 million.

The company told ITV Tonight that the contract was subject to “extensive negotiation to ensure value for money” and that there were caps on any profit made. G4S said it had been “absolutely transparent” with Locog about its finances.

G4S yesterday admitted that it has so far trained and deployed only 4,000 of the 10,400 guards it is contracted to provide.

The firm said a further 9,000 staff were in the “final stages” of training and could be deployed for the Games, but that still leaves a shortfall of at least 3,200 personnel

The figures fuelled speculation about chaos in the firm’s Olympic operations. According to the Police Federation, 150 G4S staff were due to report to an Olympic “island” site in Warwickshire yesterday, but only one arrived. There were also several reports of people who said they had been offered jobs by G4S being unable to contact the firm to find out when they should report for work.

James Brokenshire, the security minister, said the firm would pay for its failings, telling the BBC that “there will be less paid in respect of guards that will clearly not be delivered”.

Philip Hammond, the Defence Secretary, told MPs that deploying more troops to the Games will leave the Armed Forces facing “consequential costs of training programmes being disrupted, different troop movement arrangements having to be made.”

The Ministry of Defence will be reimbursed from the Government’s Olympic budget for those costs. MPs said G4S should be made to pay.

Philip Hollobone, a Conservative MP, said: “I don’t think it’s enough to rely on penalty clauses in Locog’s contract with G4S. My constituents would want the Government to say that G4S can have no more Government contracts whatsoever until they pay every last penny of the additional cost of these 3,500 troops.”

Ministers said that problems with G4S only became apparent this week. But a separate Home Office document, seen by ITV News, shows that in April, officials were predicting “big shortfalls against planned numbers” of security staff.